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Japanese Yen Outlook: USD/JPY Slams into Support at Monthly Lows

Japanese Yen Technical Price Outlook: USD/JPY Weekly Trade Levels

  • Japanese Yen technical trade levels update – Weekly Chart
  • USD/JPY downtrend testing Fibonacci support at 105.20
  • Broader risk remains lower sub-107.68 – critical support 104.12

The Japanese Yen is poised to mark the second consecutive weekly advance against the US Dollar with USD/JPY down 0.45% ahead of the New York close on Friday. The decline takes price into the monthly range lows / key Fibonacci support and the focus is on reaction off this zone into next week. These are the updated targets and invalidation levels that matter on the USD/JPY weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen trade setup and more.

Japanese Yen Price Chart – USD/JPY Weekly

USDJPY Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/JPY on Tradingview

Notes:In our last Japanese Yen Weekly Price Outlook we noted that USD/JPY testing major support and to, “be on the lookout for topside exhaustion / swing high ahead of 107.68 on recoverieswith a break / close below 105.20 needed to keep the focus lower.” Price registered a high at 107.05 mid-month before faltering with USD/JPY holding a well-defined monthly opening-range heading into the August close.

The key levels remain unchanged for USD/JPY with a weekly close below 105.20 still needed to mark resumption back towards critical support at 104.12/46- a region defined by the 100% Fibonacci extension of the March decline and the 2019 swing low. A break / close below this level is needed to mark resumption of the broader downtrend with such a scenario exposing the 78.6% retracement at 103.43. Initial resistance steady at 106.48 backed by the channel line and the 61.8% retracement of the June sell-off at 107.68- we’ll reserve this threshold as our bearish invalidation level with a breach / close above needed to shift the focus higher again in USD/JPY.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line:The Japanese Yen has preserved the August opening-range heading into the close of the week / month – a massive outside-day reversal on Friday highlights the risk of a break lower in price. From a trading standpoint, a good region to reduce short exposure / lower protective stops – be on the lookout for topside exhaustion ahead of 106.48 IF price is heading lower with a close below 104.12 ultimately needed to mark resumption. Review my latest Japanese Yen Price Outlook for a closer look at the near-term USD/JPY technical trade levels.

Japanese Yen Trader Sentiment – USD/JPY Price Chart

Yen USDJPY Client Sentiment

  • A summary of IG Client Sentiment shows traders are net-long USD/JPY – the ratio stands at +1.51 (60.08% of traders are long) – weak bearish reading
  • Long positions are6.05% lower than yesterday and 11.30% lower from last week
  • Short positions are 20.88% lower than yesterday and 20.75% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/JPY-bearish contrarian trading bias from a sentiment standpoint.

Change in Longs Shorts OI

Previous Weekly Technical Charts

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex